How to Prove You Own a BTC-Address
According to the blockchain technology, to manage the funds on bitcoin-address, two types of keys are used: public and private ones.
Private key is needed to make a signature of an outgoing transaction, while pubic key is used to verify this signature.
It should be noted that there is a misconception that public key is the very bitcoin-address. But it is not exactly so.
When you make a transaction, the “instruction” to transfer your funds, signed with the private key, and a public key to verify this signature, goes to the mempool (a kind of a waiting list for unconfirmed transactions). After the transaction is completed, when the block with your transaction has been formed, the record with your pubic key disappears from the network. After a single verification by the participants of the network, no more verification of your signature is needed.
So, what is the connection between a bitcoin-address and a public key. In fact, the address is just the hash of your public key. In simple terms, this is an encrypted public key, the cipher of which works only in one direction — it is already impossible to decipher the corresponding public key from the address.
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But sometimes it is necessary to confirm that you are the owner of this or that address, and it is you who owns the funds connected with it. This may be required when, for instance, you are purchasing something and the seller wants a confirmation of your solvency, when recovering a hacked or lost account, or to prove that it was you who made a transfer and not somebody else.
Only owning a private key can prove your ownership of a bitcoin-address, but at the same time you cannot give away your private key: anybody with an access to it can spend your funds.
To solve this contradiction, a special function was developed — “signing a message”. When you sign a message you can prove that you own a certain address and manage its funds, i.e. you are the owner of this address’s private key. At the same time, secret information is not revealed, and no risk is posed for the funds at this address.
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Creating a signature for any message is possible with lots of bitcoin-wallets. There can be some differences in interface, but in principle it all looks the same.
You will need to specify the address you need to confirm, and a message. The text can by of any nature, but it’s preferable it would tell something to the recipient. We advise you to always put the date and the reason of the message. If you sign any message without the specifics, somebody else might uses and pretend to be the owner of your address.
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We shall add some advice from a bitcoin forum’s user shorena as to what you can do and what you mustn’t do.
You can:
- Specify the current date. This guarantees that the signature will not be used again on a different day.
- Specify the exact reason. This guarantees the signature won’t be used once again for a different reason.
- Specify your nickname or name and where you use it. This guarantees that the signature will not be used again.
You mustn’t:
- Use an infected (by viruses, keyloggers etc.) computer to create a signature. Signing the message will unblock the protection of your wallets and you will lose your funds
- When making a signature, upload your private key onto the side services. Use only the services recognized by the community.
- Give your private key to somebody else to make a signature.
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After signing the message, you can give the message with your signature to the other participant. In this case the signature is a proof that you manage the address. It does not contain the private key but allows to check if you own it.
To check the signed message, it is possible to use a wallet or other resources.
Many wallets, supporting bitcoin, including hardware ones, support the function of making and checking a signed message, and it has proved to be a reliable feature.
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Have you ever used this function? Have you heard about signing the messages for cryptocurrency wallets?
